Rating loss will not hit ‘real economy’

David Coates

The loss of the Britain’s AAA rating will have no impact on its “real economy”, according to a Lancashire economist.

Bob Millward, a senior economics lecturer at the University of Central Lancashire, said the decision of ratings agency, Moody’s, to downgrade the country from AAA was unlikely to impact businesses.

Yesterday, the pound started to recover some of its losses made from the first ratings cut since the 1970s after falling to a two-and-a-half year low against the dollar and a 16-month low against the euro.

Mr Millward said that even with the downgrade the UK remained one of the safest places for overseas investors in the world, but said it had left Chancellor George osborne with egg on his face.

He said: “The Chancellor set a trap for himself when he said that part of the evidence his economic policies were working was to retain the AAA rating.

“There was always a risk that one of the big four ratings agencies would take Britain’s top rating off it and he would be exposed to the kind of flak his has.

“But, in terms of the real economy, the impact will be non-existant, Britain remains a good place to invest.”